A real Autumn Statement, part 1 – lemmings in denial
In this excellent article Dr Tim Morgan from Tullett Prebon exposes the true state of the British economy and gets to the root cause of the problems we face.
From the article:
“Britain has suffered from two decades of leadership (if such it can be called) which has been delusional, short-sighted, vainglorious, obsessive and spineless… The really intractable problem is not that Britain is going bust, but that, in many ways, it seems to lack a collective willingness to change direction”.
Dr Morgan addresses an issue that we have covered many times, namely that fact that “Britain has become obsessed with consumption whilst turning its back on production”. He notes that, “In inflation-adjusted terms, manufacturing output declined by about 19% between 1997 and 2007, whilst the real estate (+37%) and finance (+41%) sectors thrived, and there was a 27% real increase in retailing.
The article also exposes the extent to which the economic boom that we experienced between 1997 and 2007 was fuelled by an increase in individual and government debt.
“Even in the supposedly “good” years, then, each £1 of “growth” involved borrowing an extra £2.07 (a ratio which worsened steadily as time went on, averaging £3.14 between 2002-03 and 2007-08)… People then professed themselves both surprised and dismayed when a debt-fuelled boom came to an end”.
For more on the solution to the problems we face, see How To Solve The Global Financial Crisis: A 20 Point Plan.